CBL, Kroll and the Liquidity Crunch

0
452

To a large extent, the current liquidity crunch, according to financial analysts, can be traced to the alleged missing L$16 billion. And questions whether the money was indeed infused into the economy via local commercial banks have since gone unanswered, although CBL officials maintain the money was fully accounted for.

The entire cast of CBL officials, including the son of former President Sirleaf, charged for criminal involvement in the saga, have also since been absolved of any wrongdoing, following what legal analysts say was a sham trial.

The liquidity crunch is having a paralyzing and strangulating effect on the economy and ultimately the public. Even mutilated notes appear to be in short supply. In the face of mounting public criticism, the CBL has attributed blame to the Legislature for the liquidity shortage.

CBL officials maintain that the refusal of the Legislature to authorize the printing of an additional 7 billion worth Liberian dollar banknotes is reason why the public is experiencing such immense difficulties obtaining Liberian as well as US dollar banknotes from the various commercial banks.

But as recent as July 2020, the United States Agency for International Development (USAID) issued a statement praising the CBL for working along with Kroll to competitively procure and print L$4 billion banknotes to help ease the liquidity crunch.

The USAID statement read:

The United States Agency for International Development (USAID) has extended “sincere congratulations to the management and staff of the Central Bank of Liberia (Central Bank) on the successful competitive procurement and printing of L$4 billion in Liberian Dollar Banknotes to help ease the liquidity situation in Liberia and provide ordinary Liberians access to the cash they need to pay for essential goods and services.”

“As part of that program,” USAID said, “the Central Bank worked with Kroll Associates (Kroll), an internationally recognized risk mitigation firm, to put in place a competitive, accountable, and transparent procurement process and to securely track the shipment of the new banknotes from the printer to the Central Bank’s vaults in Monrovia. We are pleased that the Central Bank will continue to work with Kroll to ascertain that the new banknotes are in full compliance with the contractual specifications and ensure their proper injection into the banking system and the broader Liberian economy.

“USAID looks forward to continuing to support this Liberian-led effort, managed and executed by the Central Bank management team and staff, in accordance with international best practices. We have been here, we are still here, working together, the United States and Liberia, pursuing fruitful collaborations in service to the people of Liberia.”

During the probe it was discovered by both the PIT and Kroll that CBL officials were deliberately not recording official transactions as required. But for strange reasons, Kroll published a redacted report of its findings, which the public found very suspicious.

Nonetheless, Kroll, as evidenced by the USAID statement, was hired to work along with the CBL to procure and print L$4 billion banknotes. According to the statement, the process was successfully concluded and for this, USAID had lavish and effusive praise for the CBL.

Only six(6)months later, the nation finds itself confronted with a serious liquidity crunch which is being blamed on Legislative reluctance to authorize the printing of 7bn which sources say the CBL had requested.

However, a legislative source said some Senators had at the time told CBL authorities to place the matter on hold until after their return in January 2021. This would have allowed them time to do the required “Due Diligence”, according to sources.

But a Senator, responding to the CBL said if the CBL maintains that no money ever went missing from its custody and that the L$16 billion banknotes were all accounted for, then why is there a shortage of LD banknotes particularly in view of the additional L$4 billion which has been printed and brought into the country recently?

According to sources, commercial banks are being hard-pressed to provide US dollars to their customers on demand, but they are experiencing extreme difficulties getting the CBL to replenish their reserve requirements which, according to sources, the GoL has borrowed but has not repaid.

The CBL, in response to heightened public concerns about this matter as well as the  reported unauthorized movement of cash from GoL’s Consolidated Accounts at the various commercial banks, issued a statement declaring that it does not have statutory control over the operational functioning of GoL’s transitory accounts at commercial banks.

It also said the CBL does not have control over the movement of cash from its depository. A review of the CBL’s 2019 audited financial statement is probably the best instrument to help the public make meaning of current developments. The statement is usually published online.

However, the CBL has not made it publicly available. This is highly unusual.  Whatever is the case, the Liberian people deserve to know the truth about the situation that has for all purposes ruined for them what would have otherwise been a festive and joyous season.

The celebration of the Christmas and New Year holidays is a matter that goes to the heart of nearly every Liberian. But from the look of things, many Liberian families appear set to face a very bleak Christmas and New Year holiday season as civil servants have gone unpaid for several months.

Their situation is made worse by the current liquidity crunch which makes it difficult to even receive remittances from friends and relatives abroad.

Just when the situation is going to improve is anyone’s guess. The CBL has to get its act right. The public needs to know why was the Legislature reluctant to authorize the printing of L$7 billion banknotes. Even then, where was Kroll in this matter?

Was the Kroll aware that the CBL had made such a request granted the CBL did do so? If yes, then what was the advice of Kroll and why did it go along with the decision to print L$4 billion rather than L$7 billion as now claimed by the CBL?

LEAVE A REPLY

Please enter your comment!
Please enter your name here